What does the apprenticeship levy mean for your business?

February 13, 2017

For many businesses the thought of the upcoming changes being introduced in April as the Apprenticeship Levy is officially rolled out, is a cause for unease and caution. While the government has aimed to make the new tax as clear as possible, it is still a largely theoretical issue, and until it actually comes into force there's no real way to know the impact it will have. However, based on the information so far there are several things that are likely to be affected:

The way companies train staff

One of the options for organisations looking to maximise the benefits accrued via the apprenticeship levy is to become a training provider, either on an internal basis or to other companies as well. Those companies who already have the capacity and expertise to deliver the necessary apprenticeship training in-house are likely to take the route that allows them to deliver their training themselves. As a result the type of training available to all staff is likely to be updated, especially in the areas relevant to apprentices. Furthermore because of the funds being lost to the tax, a lot of companies are likely to reduce general training budgets for staff in order to accommodate the tax. Depending on how well this is managed they may see a decline in staff engagement and outputs, as professionals development is a key aspect of maintaining these. Circumnavigating these challenges will require businesses to be more innovative and cost-effective in their training provision.

Graduate intake

In the past many organisations had offered far more places for graduates than apprentices, but this will naturally shift due to money being commandeered to pay specifically for an increase in apprenticeships. If businesses want to get any value from the new tax, they have to take on apprentices, it's as simple as that. If organisations choose to continue to take on graduates as well, they will need to be much more targeted in their recruitment as they can no longer afford to lose half their yearly cohort as there will be fewer to start with. Finding ways to make sure the right graduates are hired will become increasingly important.

The long-term effects of the apprenticeship levy will certainly be interesting to witness, and there's a lot of potential change on the horizon, making it vital for companies to devise their talent and recruitment strategies in a way that will continue to allow them to hire the best people for their business, regardless of their avenue into the company.